Nov. 11 (Bloomberg) -- The U.S. is correct in pursuing a
weak-dollar policy because of the need to fix the nation’s trade
deficit, according to John Taylor, founder of FX Concepts LLC,
the world’s biggest foreign-exchange hedge fund.

“It’s important for the U.S. to try to straighten out its
trade balance and it’s interesting, though, that a the weak
dollar may not be enough to help,” Taylor said in an interview
on Bloomberg Television’s “In The Loop” with Betty Liu.

The Federal Reserve said Nov. 3 it would purchase an
additional $600 billion in government debt to spur inflation and
growth, while the extra liquidity is forecast to debase the
currency. A weaker dollar makes U.S. exporters’ overseas sales
more price attractive to foreign buyers, which would help reduce
the trade deficit.

Taylor, 76, said the U.S. deficit is heavily influenced by
its gap with China, which is linked to currency imbalances.

U.S. President Barack Obama and his Chinese counterpart Hu
Jintao spent “the bulk” of an 80-minute meeting in Seoul
discussing to exchange rates before sitting down with other
leaders to begin their Group of 20 summit tonight.

China’s record $28 billion trade surplus with the U.S. in
August heightened criticism its government maintains an unfair
cap on yuan appreciation to the detriment of U.S. businesses.
Obama, who has pledged to double exports within five years, has
sought to broaden the currency debate by linking it to a
worldwide effort to rein in current-account imbalances.

Last month Taylor said the dollar will remain weak against
the euro through November until the effect of the Fed’s bond-buying program deteriorates. Today, he recommended selling the
euro because of internal problems in Europe.

The dollar touched a low of $1.42.82 Nov.4 before
rebounding 3.5 percent to trade as strong as $1.3685 today. The
euro is going to slide faster than the dollar did, Taylor said.

“I’d sell the euro reason for that has nothing to do with
currency wars, but has to do with what’s going on inside
Europe,” New York-based Taylor said.